Second Sight Medical Products (EYES)

Lisa Wilson IR
Will McGuire President and CEO
John Blake CFO
Amit Dayal H.C. Wainwright
Call transcript
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Ladies and gentlemen, thank you for standing by. Welcome to the Second Sight Third Quarter Results Call. [Operator Instructions].

As a reminder, this conference is being recorded, Wednesday, November 7, 2018. I would now like to turn the conference over to Lisa Wilson, Investor Relations for Second Sight. ahead. go Please

Lisa Wilson

are Good quarter Greg. Investor welcome Second Blake, today's to for Executive and Thank and Officer earnings afternoon call. third John call on me XXXX Sight. Financial Wilson, McGuire, This Sight's President can Second Chief Officer you, detailing the Chief With and XX, Will is the Relations the three for Relations At Sight. the XXXX. Second the website results press of market, Second through company at ended financial September be issued section of of secondsight.com. close a Investor The release Lisa press accessed release Sight months

You the webcast access can this also call from there. of

expectation, to started, materially as are Litigation events this considered any information would Sight today's the uncertainties, and in forward-looking results that of press future those on the projection, Before to remind by Private or Securities belief, Reform company's These be statements call I intent statements Act. future noted regarding forecast, statements not we the and performance, Such anticipation, are forward-looking of risks future projected differ involve performance. forward-looking Second based made and release SEC. available statements may today everyone afternoon's filings that in and may from conference forward-looking defined get a as guarantees like with those including on Second Sight's the Actual management statements. express

next these to of telephone specifically completion be statements Sight for shortly replay will Second call update as call forward-looking the available required this weeks. any obligation or law. the of intent except by A disclaims two after

information secondsight.com. for month webcast in on dial-in the press today's find archived available website, release. one will company's be You'll The the

listening announcements November who XXXX. archived Since Sight Second benefit may the replay on was made call then, topics related to the or For may X, held and to recorded discussed. those the of this have webcast, be

turn I'll SEC releases the McGuire. that, And Second Sight's CEO, to most Will filings. recent with the reference company's call press please and over So,

Will McGuire

this Thank thank revised made you, call. and good progress Lisa, you strategy call QX our the for during discussed during QX joining afternoon. We our all executing

reminder, and promising of Sight number efficient related indicated a programs; number technologies on X, provide focus execution development X, use and of Orion powerful to one, experience patients. number objectives; that to I As that the clinical of R&D a the would commercial X the Argus activities; and richer more Second advancement our capital major

his Chairman relative like all During Board, our the I for provide updates of first But call, I continued objectives. Gregg thank of to support the would Williams, would to company.

XX to continued invested a blind our from financial has innovative position company the call. strong will future in via he a XXXX, John During almost private as talk in more million develop shared reflects commitment later well vision hope offer to Gregg’s that exciting belief with in company's cause technologies the Orion. the as individuals any financial placements. about

at implanted Ronald of conducting College Orion Houston. Medical Medicine an the part feasibility to with Baylor Reagan Today, on are and we UCLA Orion there where turn Let's of as which study early are individuals X our update and with program. Center we're in

We are subject to a at Baylor. be actively recruiting implanted Xth

without rehab and rehab to do sessions have entails home to subjects customized parameters vision for important glasses. cleared captured The subjects able is using the The potentially with subjects them of for vision full safe. home goals. milestone assist off overall identified it and camera be curb, Orion from reflects rehab of specific Observations in by things in the which signs, light encouraged to a subject’s the reaching belief subjects use artificial in All four we look and an the dark are locating forward the on that more they are responding effective training. been it that we performance critical rehabilitation laundry. the process updates more of implanted through Each have regular artificial begun including Orion from the providing have drop continue vision have importantly time of for because vision and artificial indicate sorting do stimulation front Four the All them, that are will to been their to training Orion. people a identifying in future. system X locating embedded continue which creates of subjects we use well the in video by couldn't real cleared basis

Although for study are objective to endpoints subjects. function anticipated the order life objective our and In finalize improvements. concerning an that visual measure data require the from sessions with we from additional of the anecdotal exciting, trial the FDA feasibility agreement endpoints, rehab need Orion more performance and observations Orion will quality

the are of We performance early year end targeting to necessary or this data. next gather the year

are the trial. clear, note we to performance pivotal FDA to performance and then move the with of XXXX. expectation could and in data sufficiently is XXXX quantify decided with if six trial our the that move pivotal without significant the half additional in to work. finalize first clinical a enrolled first like safety changes goal to a to with patients with system, we continuing forward to Orion be the can't be pathway the I'd sharing patients additional this But feasibility make to or for investors regulatory feasibility we would the before good, if of Assuming to

pleased I'm Health our or awarded we to NIH. million have National there grant from SAEs delighted been We additional call. Institutes of say or been also one were events $X.X during SAE the have to the last Finally, significant no adverse discussed since

over X for intent years. very Orion the years I'm over to past Orion’s of with X.X progress million their development. tremendous fund team's With clinical support the pleased X

from We coming vision Argus months. to implants cortical the quarter, stimulation in to business. in implanted we I'd XXXX. look confidence X.X now database. creating completed in implants million up coming X providing continues artificial of from resulting of had the XX North patients patient of the X more from and the America, the prior quarter XX during quarter potential implants to we and the U.S. I our direct year-over-year, QX were during of like turn Our updates significantly in revenue the X sequentially via our with Argus up to forward grow In

Italy, As discussed our support drive core restructuring executing we strategy allow America North to will America, of on direct is to in a many Germany, the eventually North England. in markets order centers business of times, are focus on Outside our excellence of in our key adoption. which to us and focus France,

most being intent our in which and support beginning We savings we million totaling in accounts our deliberate focus selective promising concerning confidence indirect we an XXXX. annual we post-surgery. on X By operating expense reimbursement high and markets regulatory geographies have that patients and more to to funding, anticipate infrastructure approval, also of support,

please to Importantly, will we be that support assured anywhere patients existing continue world. in the

really such the setting CMS to pleased average consider few hard for change in finalized to should outpatient the over for the by Argus. reimbursement data the hospital rate I year of and $XXX,XXX now the changes On reimbursement rate the Medicare rate also methodology were date the initiatives. applaud successfully to payment to Argus. U.S. temper of highest access this our a years will related fluctuations This for multiple year, reimbursement historical advance the of the future rate. devices reimbursement announce appreciate versus market we reimbursement with one past year setting as front, team work I represents Argus rate U.S. procedural low CMS and the volume recently for to cost. II host just years

the decision in receive by we and continues early Turning national reimbursement US, move we to Forfait confident next France year. remain outside that a Innovation process will forward

the positive We are England under Finally, to reimbursement in seen similar key program or senior II Commissioning XXXX. preparing sufficiently regard are of in this begin Argus leadership in were optimistic NHS first filings and with reimbursement testing quarter to in in contact issues the later CTE regulatory first with issues occur we testing and the implants few Xs, for on believe movement over to that a XX We Evaluation been we will the projected our With identified developments, during England, Argus clinical past close final innovation we team gen England. stakeholders and this next II have other CTE program Argus early based XXXX. recent Through relative the addressed externals, have half days. QX

the a also he Xs externals for base trial. as As in pivotal Orion the Argus will externals serve reminder,

say Before a like our to closing, few projects. research concerning I'd words

are Argus these well such in in research and distance technologies and as thermal outlined eye-tracking, pursuing last benefit recognition, our users, filtering, call, as Orion as ultimately. As users object imaging. We believe we facial will areas

clinical moving prioritizing be we'll the and programs technology testing all XXXX. on technologies of most progress good into or here goal with making are in We the promising them

team. like Finally to I'd the welcome Ryan Pat to

Second Pat develop and Chief joined of to teams. our previously ability the As years Sight with brings skills proven He experience great along the medical build to announced, leadership company device many Operating as and Officer.

to realign patients to company we of results. actions with greatest the With that, the Pat the to review the financial call a now return significantly also position, like John? John of to quarter benefit additions third combined while Ryan, turn the leadership to These this larger business possible strengthened team providing John recent I’d Blake to With shareholders. the and to the have number provide believe I our year. best our over changes

John Blake

you, Thank Will.

of volume XX compared year during units quarter. to implant XXXX XX third Our the during prior was quarter the

Asia were were During in the in implants XX America nine quarter, Middle EMEA. and North or and the Europe, East, performed

compared per from quarter was quarter XXXX, was XX%. quarter. in current XXXX. million the were of year on of the sales in period X implants third Net recognized XX was XX in quarter were third an XXXX Revenue of same prior of the third America GAAP increase in $XXX,XXX while the in Revenue of third $XXX,XXX quarter implants the units XXXX the $X.X in XXXX, the million recognized revenue of a for basis recognized During EMEA. approximately and there in X implant period, was $X.X in to North and units

quarter mix to while third sales profit the the expect recognized was profit per million of to We in third of average for cost XXXX. of sold the inventory reserve the Gross in compared million. XXXX XXXX the XXXX remainder implant. of a quarter geographic $X.X of of of continue increase credit an in in point implant included for be our revenue the Cost of of million third unit of to gross depending in a a our quarter $X.X range quarter $XX on $XXX,XXX-XXX,XXX sales $X.X the included of million

funding $X.X a prototypes. reserve of XXXX third of regulatory units. received of in from absorption third consists funds and prior quarter grants quarter third $X.X the during XXXX was attributable the to This costs. study. the produce overhead for million year and on increased compared to particularly costs and goods million of inventory and Research in quarter. offset unit increased of feasibility $X.X the year XXXX, the invalidation expense is cost Orion of expect quarter. Xs more expense, costs outside per associated to is primarily to internally and prior excess In due to verification million development related related we increased both to The stabilize grant We with net the to million $X.X million basis increase Argus $X.X services Clinical during compared utilized $X.X million headcount of quarter and and to produced activities we to primarily of XXXX increase as

and and increase while patients Argus to million enhancements and third The market and Orion additional cost $X.X in the to primarily we the to clinical including increase new XXXX. to we as existing future such more conduct million in third $X.X products marketing We II. in regulatory compared product to for assess post-market quarter of Selling increased related studies expense expect the in development was clinical activities our enroll of XXXX as clinical million quarter expenses. compensation $X.X trials

due in compared administrative expense million marketing as XXXX. XXXX transitions. percentage from non-cash to to product expense $X.X revenue. decrease stock time over third lower compensation million General costs million $X.X $X.X selling expect primarily the of of The quarter the third was and and of expressed when in decrease quarter is to executive We of a

in will our outside $X.X a annual mentioned, XXXX operating restructuring anticipate we of same loss beginning savings commercial our $X.X executing a net to Orion loss and program. As this net for XXXX. to per third North quarter an loss of of loss XXXX we business compares to Net of per a expect We the Will of share. reallocate of America. result share in about which This million million was million of $X.X the in $X.XX or $X.XX are

compensation share net the of loss The tables and excludes release. net end loss stock-based reserve reconciliation share in of non-GAAP our GAAP noncash in which be excess non-GAAP the earnings reconciliation both for net and per was XXXX. Our both of quarter including our changes at XXXX $X.XX our per loss found a full can items the inventory to third our

to million as we sheet, of our common Gregg private the Directors. September XXXX, Board of of we equivalents had carry $X.X completed on cash debt. In balance and and of stock $X.X a Williams, XX, we of placement no cash Moving Chairman with October, million

financing options through and early plans, our Given QX continue XXXX evaluate our all to board. our current we sufficient of with we have we believe runway

XXXXX. call the will in questions. I please Operator, With expect Q that, for proceed share We with additional the to open details instructions.


the the Francis, proceed line question. from please John And of with Instructions] comes question your first [Operator

Unidentified Analyst

of market what require you with and you address of for think additionally, going to the sense Orion expect, is you what better Can trial? FDA respect the us size the a of types your you and to give patients can

Will McGuire

take the go talk let's the bit outside is last back research that I this first. about in little perspective, but This market to market We I’ll call, some We about did that. again. to a Will, would firm. From with it like talked conduct an

way of not you the the treating at by criteria it's study all, long you basically is type feasibility commercial any the at can as of treat as if -- treatable criteria/exclusion we First and blindness if we look looking inclusion are the -- at written, a look currently product.

open and RP can't patients So, the exclude be in we're treat by also treated visual to than would Argus that other that case, caused But patients. it cortex. blindness to by it trauma

end from did four from eye So, market you blind disease And of glaucoma, research, buckets, then blind eye optic or blind four and buckets nerve optic the four or the population was our blind given from U.S. use to you look to major diabetic a identified people looked with refine at from or basically number who from number four about were then when those legally blind would sorry, are blindness. we combine that could it patients are the of in and patient for further expected at that of actual those we injury. XXX,XXX those patients glaucoma, to damage what to causes up treated We buckets when indications retinopathy, be. try nerve patients be trauma

tried patients So blind of other from perception. also down or we many complications, then, would be too too no-light the we eliminate legally and vision bare-light level surgery, to that sick reduced for to

US are X,XXX So, so it again numbers, to of U.S. these said to when clear up we the close with that, population the research do a And that confined population only to again, we is patient numbers very same XX,XXX. that to about patients. be end compares And RP we

and it be U.S. Western in population population we Europe, RP So, compared consider of an a population somewhat Western the look would you again, X,XXX Europe you to actually if larger when expect at then the there. XX,XXX larger be would about similar, in patients

So, there. and also of John. And me a FDA address our us then the patients population very, very question concerning for the discussions there, let large

are some final reached we the active say certainly we agreement in can will we haven't noticed, As really what probably so agreement I with look can't or comments. an certainty but a everyone like, discussions them, make trial and with

or we demonstrate have know will visual have life. First also be And in those improvement quality level to we're a function endpoints as some in of In study. all acuity of tool to and acuity, would with the measure life well certain did to their that with quality Argus, quality of somewhat that Argus. to a a we visual changes function we similar what we we visual of measurements know measure Orion going had of to of all also as life need visual

there Argus. measurements to experienced with type similar So, we what

it would say more, thinking at XX would certainly months. be pivotal, the be least of be far at say in up the a it that but I should you XX is least could patients floor, and the be number As as patients, follow would X I’d

of more these one of into than there collection that I kind but should the so defined follow a we part market numbers more again, number will and And breakthrough were Again, market So, the some floor be you know you agree are to for don't there then, a move program, as get as be will assume patients post of think setting, to the up. than trial well. of this number, the XX. data post also -- technology

So ground here. may final be a are know, we some new breaking you word,

forward numbers your understand early FDA finalize have much as do measurements we it will to, be John. with we're to we're our to finalize discussions something Orion potential FDA, said Hopefully better what then with comfortable we investors the why before next as you that the really end that's try a answers share once year with the course want And going with the So, we the design. and to that we the then, would of or performance and FDA, then know, with give soon these agreement think that, question, that have to understand move we we investors. trial really these committed and to have year, performance want and the we've Orion we that's


the next [Operator Dayal Please from your with Wainwright. H.C. line is proceed of The Amit with question Instructions] question.

Amit Dayal

-- about could you types on for you per of per with about patients, they are respect to or talk these Any metrics if can week many hours share regard this these them? talk day. color how Orion, you using In X could

Will McGuire

have a they patients the I basis weekly now, they're before we metrics they being don't took I What regular on and patient, typically going all were the -- say them on a exact cleared working weekly are the were Certainly, home on for device that especially were tested basis. basis. patients typically on the can the a they use home, with Amit. almost for rehabilitation that ones is through

the reminder, is a them as should them so weeks. I -- And do going it weekly, have the through you it. working process. to think the functionality system going out few basically We if with that's rehab someone rehab assume the every of through and And forward, not most how get better most to teaching use is how this process and use and

any So we've it to head, the how to use learned how how know, it's to inform than how and interpret move artificial just, in or filters to because to things is any someone a with potentially patients system. not better turn how take to how vision. your vision how lot my or And adjustments, it your data then, it's use of different this can on, Argus vision -- you to

how it important typically by dedicated one use it best to certainly to not probably learned to tiring lot subjects of more how -- and a can pretty, very make having it. have day work with pretty for of this what of process. -- make typical on the hours, a great the -- in and to progress couple is session probably say of interpret I've vision this we're this be how with work artificial typically able than is means have we sometimes. a the and a times them I’d it said that many So, we to is Argus And before, as patients

ballpark per as than of hours more probably couple session, Amit. just So, a not a

Amit Dayal

seemed patient. you enrolling from like sixth in had process last that you the The our and were sixth Did identified materialize… the it not patient call,

Will McGuire

few has the quite with had the to We've patient. team where chosen Baylor at not a forward move

So the feel met it wanted. the didn’t was all exactly we patient they as right that criteria

hard of to certainly here right do know sure diligent haven't would the patients their honestly, before to that I at enrolled evaluation Baylor patient, have working very that So, soon. do flip now. that side, in expected find is are just and happen the patient the it disappointed I But I'm I'm the on team and we'll we very very

Amit Dayal

event of seen patient, And the also call, adverse I else [indiscernible] that… there the previous one was mean, anything incident with have you from

Will McGuire

yeah, not we that and that -- call SAEs in events any we or we announce patients. since with did the additional have event serious point, any serious No, had had previous we one had adverse Amit, adverse

Amit Dayal

the Could [indiscernible] you the a about talk bit label patients? efforts for expansion RP

Will McGuire

way that current consider interesting or question, RP That's didn't the larger a haven’t frank, population an or get would much be we to and script. no-light, past to significantly it’s not the population, bare-light X we very about the that talk we than patient that's with good -- additional done for over are that until really still study. IDE to months, haven't We a really be but evaluating FDA X looking we -- in data that a

the And a specific a that to have don't point revised down to we to go any more to this with they maybe progress I But FDA few so we're a acceptable. report. back would really if proposal at consider little we trying on potentially have see ideas, can chase that

hopefully, on our I'd Orion focus in limited it. you resources, haven't of much with has XX next We the days. call, And have but been the just more to say in I'll tell last dropped

Amit Dayal

efforts sort XXXX Will cost well? or your and as talked pull in will of benefits savings of that the of see XXXX early aboard, sales say about. realize in back marketing second you half to the $X million you some Regards you in mostly those

John Blake

pick Hi, that Amit, I’ll this question. is John,

So savings should so year in those impact end, by that full a expected be will we for XXXX. year kick

are of to Orion program. We reallocating on portion planning that savings the substantial

Amit Dayal

grants there are your grant, efforts? potentially that could In access other support regard to to you this NIH

Will McGuire

NIH specifics, from we're at the money always sources. or possibility other Without from obtaining grant looking going I'd say into of

that very creating NIH as vision finds interesting. cortical scanning is of sources of funding constantly for area that. think sources and looking such And an just I we're via say yes, stimulation I So, that non-dilutive would

the to obtained, other report grant hopefully now. nothing money be last so right than won't that but And we've this

Amit Dayal

before important we an the keeping of of in And that catalyst end be XXXX, could you highlight catalysts should terms any eye on?

Will McGuire

to the probably by to the of level we're we most that important thing is days. going vision Orion ultimately. what the we quantify performance expect think to better -- the there think around important I able get we're provide being the just most for able and to Orion that need our next far patients, We XXX get that's to probably arms over XX if

have So, whether end year take move sure, that and like of not the discussions the performance understanding or not, by the I'm try forward we [Technical to also Difficulty] that FDA. but we we would certainly would then to of and with our

the hopefully kind around of we the clinical a finalized that FDA half won't got say a lay patient next and performance. regulatory happen with the That end maybe out well. until year to year, of first sometime, the but also want certainly for and to of as more we've So, get we’d investors pathway could by


will now back the I conference Maguire. and you, Will Thank turn to

Will McGuire

Second the for Hey work their today, past night. all you our great participation to team thanks have a and again all thank quarter call Sight for on over the


line. and conference. you disconnect your participation you Ladies ask does gentlemen today's that please thank We that for and conclude your